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Item 7. Management’s Discussion and Analysis

2024-04-01 compared with 2023-03-31 · 94 added, 71 removed, 65 unchanged (72% of the section changed)

1 unchanged sentence

CONDITION AND RESULTS OF OPERATIONS

We are headquartered in Flushing, New York City.

After a series of

acquisitions and dispositions in 2022 and 2021, our primary business, which is carried out by Shandong Yunchu, Jingshan Sanhe, Jilin Chuangyuan,

Fast Approach Inc.

and Xianning Bozhuang, is:

● Tea products cultivation, packaging, and sales;

We are headquartered in Flushing, New York.

a series of acquisitions and dispositions in 2023 and 2022, our primary business, which is carried out by Shandong Yunchu, Jingshan Sanhe,

Jilin Chuangyuan, Fast Approach Inc and Xianning Bozhuang, is:

● To sell black tea product cultivation, packaging, and sales;

● To sell high-grade synthetic fuel products;

● To distribute beef and mutton products.

● To sell f ormaldehyde,

urea-formaldehyde glue, methylal, and clean fuel oil;

● Online advertising services and mobile games;

● Online advertising services and mobile game.

Results of Operations

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with the company’s audited consolidated financial statement for the years ended December 31, 2023, and 2022 and related notes to

Twelve months ended

(In Thousands of USD)

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Interest expense

Other income (expense)

Impairment of goodwill

Share of losses from equity method investments

Loss on disposal of equity investments

Loss before tax

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Net loss from discontinuing operations

Net (loss) income

Net Revenues .

Our net revenues for the

twelve months ended December 31, 2022 amounted to $44.76 million, which represents an increase of approximately $6.99 million, or 19%,

from $37.77 million for the twelve months ended December 31, 2021.

This increase was attributable to the acquisition of certain subsidiaries

and VIE in 2022.

fiscal year ending on December 31, 2023 amounted to $27.12 million, reflecting a decline of approximately $17.64 million or 39% compared

to the previous year’s figure of $44.76 million (ending on December 31, 2022).

In the previous fiscal year, 50% of our total revenue was

generated from the sale of a diverse range of food products to restaurants.

However, this segment has been significantly impacted by the

adverse effects of COVID-19, leading to a decline in sales from $23.34 million in 2022 to $14.32 million in 2023.

The residual decrease

was attributable to disposal of certain subsidiaries in late 2022.

Cost of Revenues.

During the twelve months

ended December 31, 2022, we experienced an increase in cost of revenue of $6.48 million or 19%, in comparison to the twelve months ended

December 31, 2021, from approximately $33.92 million to $40.41 million.

This increase was mainly due to the acquisition of certain subsidiaries

and VIE in 2022.

During the year ended

December 31, 2023, we experienced a decrease in cost of revenue of $14.72 million or 36%, in comparison to the year ended December 31,

2022, from approximately $40.41 million to $25.69 million.

This change was mainly due to a decrease in sales of revenue, as discussed

above, and disposal of certain subsidiaries in late 2022.

Gross Profit .

Our gross profit increased

by $0.51 million, or 13% to $4.35 million for the twelve months ended December 31, 2022 from $3.85 million for the twelve months ended

December 31, 2021.

This increase was mainly due to the aforementioned reasons, attributable to the acquisition of certain subsidiaries

and VIEs in 2022.

Our gross profit

declined by $2.92 million, representing a decrease of 67% to $1.43 million for the fiscal year ended December 31, 2023 compared to

$4.35 million for the fiscal year ended December 31, 2022.

This decline can be primarily attributed to the aforementioned factors,

namely a decrease in sales revenue and the divestiture of certain subsidiaries towards the end of 2022.

Additionally, another

contributing factor was a slight increase in the average combined cost per unit of our products.

The gross profit margin decreased

from 10.77% in 2022 to 5.57% in 2023, representing a decrease of 5.2%.

This decline is primarily attributed to the significant

reduction in sales of cold chain food mentioned earlier, as well as a notable increase in associated warehousing costs.

Operating Expenses

Selling and Marketing Expenses.

Our selling and marketing expenses

increased by $112,000, or 5%, to $2.17 million for the twelve months ended December 31, 2022 from $2.05 million for the twelve months ended

December 31, 2021.

The selling and marketing expenses mainly come from transportation and storage cost of $0.72 million;

the sales staff

salaries cost of $0.36 million and selling commission of $0.43 million.

and marketing expenses decreased by $1.27 million, or 59%, to $0.90 million for the year ended December 31, 2023 from $2.17 million for

the year ended December 31, 2022.

This decrease was mainly due to the aforementioned reasons, attributable to a decrease in sales of revenue

and the disposal of certain subsidiaries in 2022.

General and Administrative Expenses.

We experienced a slight decrease

in general and administrative expense of $181,000 from $7.22 million to approximately $7.01 million for the twelve months ended December

31, 2022, compared to the twelve months ended December 31, 2021.

This cost decrease was mainly due to the decline in third party service

The General and Administrative Expenses mainly come from third party service fees of $1.96 million;

administrative staff salary

costs of $1.60 million and depreciation;

amortization expense of $0.81 million and other daily sporadic management costs.

Our net loss increased by $15.86 million, or 159%, to a net loss of

$25.85 million for the twelve months ended December 31, 2022 from $9.99 million in net loss for the twelve months ended December 31, 2021.

This increase was mainly due to losses of disposal of the subsidiary, Anhui Ansheng Petrochemical

Equipment Co., Ltd., impairment of goodwill and our effort to expand our business.

Going Concern and Capital Resources

general and administrative expenses for the year ended December 31, 2023 increased by $1.98 million, or 28%, to $9.04 million compared

to the previous year’s $7.06 million.

After adjusting for the impact of $1.10 million from last year’s General and Administrative

Expenses generated by the disposed subsidiary, the increase in fiscal 2023 is approximately $3.03 million.

The primary reason for this

increase is attributed to inadequate inventory management, resulting in a loss of inventory of approximately $1.97 million and an expected

credit loss of $2.76 million on trade receivables, partially offset by a decrease of $1.70 million attributed to cost control during 2023.

Our net loss decreased by $5.09 million, or 20%,

to a net loss of $20.84 million for the year ended December 31, 2023 from $25.94 million in net loss for the year ended December 31, 2022.

This decrease was mainly due to the aforementioned reasons, attributable to a decrease in sales of revenue and the disposal of certain

subsidiaries in 2022.

Liquidity and Capital Resources

In assessing our liquidity, we monitor and analyze

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been cash generated from operations and private placements.

As of December 31, 2022, we had cash and cash

equivalents (including restricted cash) of $93,500 compared to $1.13 million as of December 31, 2021.

The debt to assets ratio was 33.16%

and 40.41% as of December 31, 2022 and December 31, 2021, respectively.

We expect to continue to finance our operations and working capital

needs in 2022 from cash generated from operations and, if needed, private financings.

Suppose available liquidity is insufficient to meet

our operating and loan obligations as they come due.

In that case, our plans include pursuing alternative financing arrangements or reducing

expenditures as necessary to meet our cash requirements.

However, there is no assurance that we will raise additional capital or reduce

discretionary spending to provide liquidity if needed.

As of December 31, 2023, we had cash and cash equivalents

of $436.38 thousand compared to $93.49 thousand as of December 31, 2022.

The debt to assets ratio was 54.40% and 33.16% as of December

31, 2023 and December 31, 2022, respectively.

We expect to continue to finance our operations and working capital needs in 2023 from cash

generated from operations and, if needed, private financings.

Suppose available liquidity is insufficient to meet our operating and loan

obligations as they come due.

In that case, our plans include pursuing alternative financing arrangements or reducing expenditures as

necessary to meet our cash requirements.

However, there is no assurance that we will raise additional capital or reduce discretionary

spending to provide liquidity if needed.

We cannot be sure of the availability or terms of any alternative financing arrangements.

Going Concern

The accompanying consolidated financial statements

have been prepared assuming that the Company will continue as a going concern;

however, the Company has incurred a net loss of $20,843,796

attributable to common shareholders for the year ended December 31, 2023.

As of December 31, 2023, the Company had an accumulated deficit

of $140,724,597, a working capital deficit of $6,675,220, its net cash used in operating activities for the year ended December 31, 2023

was $ 5,282,343.

These factors raise substantial doubt on the Company’s ability

to continue as a going concern.

The accompanying audited consolidated financial statements do not include any adjustments that might result

from the outcome of this uncertainty.

Management’s plan for the Company’s continued existence is dependent upon management’s

ability to execute the business plan, develop the plan to generate profit;

additionally, Management may need to continue to rely on private

placements or certain related parties to provide funding for investment, for working capital and general corporate purposes.

If management

is unable to execute its plan, the Company may become insolvent.

The following table provides detailed information

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Net cash flows used in operating activities

Net cash flows used in investing activities

Net cash flows provided by investing activities

Net cash flows provided by financing activities

Operating Activities

Net cash used in operating activities from operations was approximately

$9.01 million and $0.52 million for the year ended December 31, 2022, and 2021.

Net Cash decrease in operating activities for the year

ended December 31, 2022, was mainly comprised of non-cash effects of depreciation and amortization expense of approximately $1.48 million,

impairment of inventories of approximately $0.2 million, impairment of goodwill of about $10.38 million, loss on disposal of subsidiaries

of approximately $9.57 million and the decrease of account receivable of approximately $0.66 million, the reduction in accounts payable

of about $0.36 million and the decrease in other payables and accrued liabilities of about $2.97 million.

Net cash used in operating activities decreased by $3.73 million to

$5.28 million during the year ended December 31, 2023 from $9.01 million during the year ended December 31, 2022.

This decrease was primarily

due to the decrease in net loss excluding non-cash expenses, gains and losses of $1.42 million and changes in net operating assets and

liabilities of $5.15 million.

Investing Activities

Net cash used in investing activities for the twelve months ended December

31, 2022 was $3.85 million, representing a decrease of $7.96million in net cash used in investing activities from $11.8 million for the

same period of 2021.

Cash used in investing activities for the year ended December 31, 2022 was mainly comprised of the partial investment

payments of approximately $4.1 million that we made in relation to the Xiangtian Energy Co., Ltd.

Net cash provided by investing activities for

the year ended December 31, 2023 was $2.67 million, representing an increase of $6.52 million from the $3.85 million used in investing

activities for the same period in 2022.

This increase is primarily attributed to the disposal of a certain subsidiary amounting to $2.77

million and a decrease in long-term investments totaling $4.10 million compared to the previous year.

Financing Activities

Net cash provided by financing activities for

the twelve months ended December 31, 2022, was $10.84 million, representing an increase of $1.91 million in net cash provided by financing

activities from $8.93 million for the same period of 2021.

This is mainly due to the proceeds from the issuance of common stock.

Net cash provided by financing activities for the year ended December

31, 2023, amounted to $2.88 million, indicating a decrease of $7.95 million compared to the corresponding period in 2022.

primarily stems from a reduction of $11.10 million in proceeds generated from the issuance of common stock as opposed to 2022, partially

offset by an increase of $2.97 million attributed to changes involving related parties during 2023.

Critical Accounting Policies

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis